Japan’s financial regulator is poised to allow local banks to acquire and hold cryptocurrencies for investment, marking a significant shift towards integrating digital assets into the nation’s traditional banking system.
The Financial Services Agency (FSA) plans to discuss regulatory reforms that could equate digital assets like Bitcoin with conventional investments such as stocks and government bonds. This move comes amid a rapidly expanding domestic cryptocurrency market.
Discussions are set to begin within a working group of the Financial System Council, an advisory body to the Prime Minister. Current supervisory guidelines, last revised in 2020, prohibit banks from holding cryptocurrencies due to their price volatility.
These existing rules aimed to safeguard banks’ financial stability against potential losses from unbacked assets. The new proposal would include regulatory safeguards, such as specific cryptocurrency risk management systems, to mitigate these concerns.
The FSA is also considering allowing banking groups to register as cryptocurrency exchange operators. This would provide a more accessible and trustworthy environment for individual investors, leveraging the credibility of established financial institutions.
Japan’s cryptocurrency market has seen substantial growth, with the number of crypto asset accounts surpassing 12 million by the end of February this year. This represents a 3.5-fold increase over the past five years.
Major Japanese banks are already moving into the digital asset space. Three prominent institutions—MUFG, SMBC, and Mizuho—are collaborating to issue yen-linked stablecoins.
Separately, the FSA is also advancing amendments to explicitly ban insider trading in the cryptocurrency market. These measures, reported last week, would impose sanctions proportional to illicit gains.
These comprehensive efforts are part of a broader push to establish a fair and regulated digital asset market in Japan. The new framework aims to align crypto trading with the standards already governing traditional financial institutions.
Discussions within the Financial System Council are expected to commence soon. While no exact date for the implementation of the reforms has been specified, this initiative positions Japan as a leader in the regulated integration of cryptocurrencies into mainstream finance.